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A company has one liability in the future: 5000 to be paid in 6 years. The company wants to Redington immunize this liability, and 2-year,
A company has one liability in the future: 5000 to be paid in 6 years. The company wants to Redington immunize this liability, and 2-year, 5-year and 8-year zero-coupon bonds are available. The assets and liabilities are all discounted using an effective annual rate of 4%. Consider the portfolios: I. 1317 invested in the 2-year bonds and 2634 invested in the 8-year bonds II. 2634 invested in the 5-year bonds and 1317 invested in the 8-year bonds III. 439 invested in the 2-year bonds, 1756 invested in the 5-year bonds, and 1756 invested in the 8-year bonds Which of these portfolios would achieve Redington immunization
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